By Joseph A. Curtatone
(The opinions and views expressed in the commentaries of The Somerville Times belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville Times, its staff or publishers)
In my inaugural address, I called upon our community to set a citywide goal to reduce our net carbon emissions to zero by 2050. That’s an ambitious goal, but by setting the bar high, we will not be content to nip and tuck around the edges, but will fervently take on the challenge of climate change. Our children and their children deserve no less from us, and Somerville can make a difference. Cities are collectively responsible for over 70 percent of greenhouse gas emissions across the planet, according to the United Nations. We must do our part and do it the same way we approach every issue facing our city. We will study the facts and make prudent, patient investments today with an eye on tomorrow.
However, some of our investments today are part of the problem. We are funding the problem through our pension fund’s holdings in fossil fuel companies. So in my inaugural address, I also publicly supported the goal of the Somerville Retirement Board divesting from fossil fuel companies.
The city’s retirement board’s chief responsibility is to secure the highest rate or return possible for investments in our pension fund. In the case of fossil fuels, the moral imperative is so clear and unambiguous to warrant divestment, but this is not only a moral imperative. It’s sound financial policy, too.
There is a looming $20 trillion carbon bubble, according to a report by London School of Economics’ Grantham Research Institute on Climate Change and the Environment, in collaboration with nonprofit organization Carbon Tracker. That’s because fossil fuel reserves are overvalued, and at least two-thirds of the reserves must remain untapped underground to prevent climate change from increasing the global temperature by more than 2 degrees Celsius, a target agreed to by the United States and 113 other countries.
This means that these reserves are essentially unburnable and subsequently worthless, which will lead to incredible market losses by fossil fuel companies. Yet instead of taking this into account, the top 200 fossil fuel companies spent $647 billion in 2012 to find more fossil fuels. That’s equivalent to 1 percent of the global gross domestic product, a figure that if spent annually on climate change mitigation would stabilize greenhouse gases by 2050, according to a report by London School of Economics professor Sir Nicholas Stern. Spending billions on finding more fossil fuels when currently held reserves are likely to lose their value is a financial waste that increases the risk for investors such as the Somerville Retirement Board.
The red flag raised about the carbon bubble is supported by other financial institutions, including Standard and Poor’s, HSBC Holdings and Citi. A coalition of investors, politicians and scientists has gone so far as to warn the Bank of England that fossil fuel reserves held by companies invested in by the City of London are “subprime” assets. We remember what happened in 2008 with subprime mortgages. These fossil fuel companies are poised for a great fall, and our legal obligation to fully fund our pension system does not need to fall with them. Divesting from fossil fuels is not only the moral choice, it’s the financially responsible choice.
We are not alone in this fight. Seattle, San Francisco, Portland, Madison and Providence have already agreed to divest from fossil fuels. These cities’ investments in their pension funds are at less risk today because they’ve divested. And they have sent a message that they will not take ownership in the corporations who seek higher profits at the expense of our planet’s future.
Our community has already led the way on taking responsibility for our environment, from increasing recycling and installing solar panels on our schools, to green building incentives in the rezoning of Union Square and Boynton Yards, to energy-efficient LED lights for our streetlights, to making sure that the Green Line Extension and Assembly Square Orange Line station become a reality. We will continue to lead the way in 2014 through citywide Climate Change Mapping Sessions, detailing everything in our city that affects greenhouse gas emissions and identifying what we need to do to reduce these emissions and reach our net-zero goal by 2050.
Even with all that, we must start with what we’re doing right now to contribute to the problem. We are currently investing in the destruction of the planet. We need to divest from fossil fuel companies now.